I wanted to title this piece “what if” but I think I’ve already done that 2 or 3 times so instead…I have to ask, what exactly would happen if there were a class action lawsuit against the exchanges that trade silver and gold? What if there were also class action suits against the World Gold Council and GFMS for understating global demand while overstating supply? What if the “crazies” went so far as to sue JP Morgan for concentrating positions and cornering markets? Or maybe the CFTC for letting it happen even while being spoon fed evidence from GATA and other sources. What if it went so far that boards of directors of mining companies were sued for breaching their fiduciary responsibility by not making a “peep” all these years and for selling “assets” below true market value?
Yes I know the above sounds absurd and maybe it is but Kevin Maher of New York filed a class action suit yesterday against the 5 firms that participate (d) in the London fix from 2004 to present. Is this crazy or nuts? Yes it probably is and the odds in my opinion are stacked against him from so many different directions but…if it does not get thrown out immediately he then may have a “trump card.” This trump card is quite similar to the one that Blanchard played back in the early 00s when they took the baton from Reg Howe’s foray. Back then, Reg sued the Fed in Boston court and had a sympathetic judge that agreed with his argument but was found to have “no, or limited standing” so Blanchard stepped up and sued Barrick (with JP Morgan attached) because they did have standing. We will never know exactly what happened here because the case was settled and Blanchard was muzzled by the settlement. The thing is, “discovery” was just TOO SCARY of a thing because it meant pulling the curtain back to see just exactly what was “being done” to retard the prices of silver and gold. I think it was Jim Sinclair who said that no case of this sort would ever truly go to trial because “the discovery process is like sunlight to vampires,” he’s been right so far.
I have no idea how far this suit might go but can you imagine if a groundswell of “plaintiffs” joined in the ranks? Plaintiffs like all the jewelers in the country? How about all of the coin dealers in the country? Or anyone who bought silver, gold or metals ETF’s? How about the miners? Can you imagine these spineless wonders joining in? Of course anyone who bought mining shares during this timeframe would qualify also. Yes I know, each group would have their own gripe and it’s possible that jewelers might even complain that the price was not “driven” low enough but the bottom line complaint would be that prices paid or received were not correct and they were interfered with.
Can you imagine how fast a settlement would be offered if JP Morgan were included and directed by a judge to open their books to discovery? Can you imagine how big the settlement might have to be if a judge were to include ALL of the players over the years…on BOTH sides? Could JP Morgan or Deutsche Bank or any of the others say that they were “working for” or the “agent of” the Federal Reserve or some other central bank?
Yeah I know, it’s just “dreaming.” It’s dreaming because no judge who wants to live would allow anything of the sort. I say this because it goes way too deep and way too high. In fact, it could even be claimed that much of this was done at the behest of the “President’s working group on financial markets” …which would be a free get out of jail card. Another problem is “time.” It will take too long for any suit to work its way through the courts, in my opinion a delivery failure will occur before this thing is even seen. Once we have a delivery failure, then one must ask “what can I win” if I bring this suit? I’m pretty sure that any settlement and surely any award would be in “dollars” rather than ounces… And of course, if I had to bet, I would on some if not many or even all defendants not having two nickels to rub together once the derivatives chain breaks.
I spoke about this very subject with a close friend and old client of mine, he started laughing almost uncontrollably and said, “I want to join this lawsuit, I just want my money back, never mind what I should have made.” Don’t get this wrong, he did very very well, so well that he was able to retire in his late 40’s. He was in the shares early and took metal out as profit but yes, he did however take a few very big “lickings” on the COMEX. He was referring to some of the margin hikes after the close on Friday followed by straight down moves on a Sunday night when there was no volume…followed by another margin hike which caused margin calls …which was like flushing a toilet! He is correct though, it sure would be nice to have some of that COMEX “vapor” money back …but I suspect that by the time any case or settlement were to come around we will be more interested in other things like trading beans for toilet paper or silver for gasoline.
Before I finish I’d like to recount one other thing my buddy said which had me rolling on the floor laughing and yes I absolutely remember this like it was yesterday. My buddy said to me, “Doug Gillespie (who was partners with John Williams of Shadow Stats and has since passed away) was right, he always told us that our markets are so perverse and rigged that an ICBM could be launched and the Dow will close at a new high because somehow that will be spun as bullish.” Well, sure enough, this is exactly what happened yesterday, Russia “test fired” an ICBM missile in truly classic “middle finger fashion”…and yes the Dow reached an all-time high. This is the very last and only thing left for Washington to point at as “proof” of how good things are!
I know that I rambled on with this piece but please understand that this will all end badly. Actually, I believe the coming financial train wreck to be of Biblical proportions. Will owning gold and silver “save you?” Are you going to be “rich?” No, but you will at least have a fighting chance and far better odds of surviving than without them.
P.S. We just got through another (rare until this year) 3 nights below freezing here in South Texas. My “1,200 groundhog” Principe’ started losing gobs of hair last Thursday and no longer looks like a baby chick, Spring must be right around the corner!